CIBC Raises $1.5 Billion in Common Share Equity from Private Investors



    TORONTO, Jan. 14 /CNW/ - CIBC announced today it expects to further
enhance its capital position by raising a minimum of $2.75 billion of newly
issued common equity.
    Specifically, CIBC has received written commitments from a group of
institutional investors, including  Manulife Financial Corporation, Caisse de
dépôt et placement du Québec, Cheung Kong (Holdings) Ltd. and OMERS
Administration Corporation, to invest, by way of a private placement,
$1.5 billion in CIBC common shares. CIBC World Markets Inc. and UBS Securities
Canada Inc. acted as joint bookrunners in the private placement.
    In addition, CIBC has entered into an agreement with a syndicate of
underwriters led by CIBC World Markets Inc. as bookrunner and jointly led by
UBS Securities Canada Inc. under which they have agreed to purchase
$1.25 billion in CIBC common shares at a price of $67.05. CIBC has granted the
underwriters an over-allotment option, exercisable in whole or in part at any
time up to 30 days after closing, to purchase up to an additional
$187.5 million in common shares at the same offering price. Should the
over-allotment option be exercised in full, the total gross proceeds of the
public offering would be $1,437,500,000. The purchase price of the shares
acquired by the private placement investors is $65.26. In addition, the
private placement investors will receive a commitment fee equal to 4% of their
individual commitments. Both the private placement and the public offering are
anticipated to close on or about January 24, 2008.
    CIBC's Tier 1 capital ratio was 9.7% as of October 31, 2007. On the
assumption that $2.75 billion of equity is raised through the share offering,
and factoring in the impact of the write-downs and fair value adjustments
noted below, CIBC estimates its Tier 1 ratio to be approximately 11.3% as of
December 31, 2007, well in excess of its target of 8.5%. (Table 1)
    "As we have said before, one of our priorities is to further strengthen
CIBC's capital base for contingent risk given the challenging credit market
conditions and the potential impact on CIBC," said Gerry McCaughey, President
and CEO of CIBC. "Today's action provides our shareholders with greater
certainty that CIBC's capital levels will remain strong even in the event that
additional write-downs related to the U.S. residential real estate market
become necessary."

    CIBC also provided an update today on the write-downs it has taken for
the two months ended December 31, 2007, in relation to its exposure to the
U.S. residential real estate market.

    -   With respect to CIBC's unhedged exposure (Table 2):
        -  Write-downs of approximately US$462 million (US$310 million
           after-tax). The remaining net unhedged exposure, which is
           approximately US$307 million, is mitigated in part by subprime
           index hedges with an estimated remaining hedge value of
           US$155 million.
    -   With respect to CIBC's hedged exposure with counterparties (Table 3):
        -  As referenced in CIBC's press release, dated December 19, 2007,
           CIBC confirms that it has made a US$2.0 billion (US$1.3 billion
           after tax) fair value adjustment with respect to the estimated
           current market value of the counterparty protection receivable
           from ACA Financial Guaranty Corp., with the result being that
           CIBC's net receivable from ACA is now valued at US$70 million.

    CIBC has U.S. residential real estate exposure with protection purchased
from other financial guarantors against which no additional fair value
adjustments have been made. In the event that the credit ratings for one or
more of these financial guarantors were downgraded, or if CIBC's own
assessment of the credit status of any of the financial guarantors
deteriorated significantly, it is possible that CIBC would make additional
fair value adjustments. Although no additional material fair value adjustments
are currently contemplated, it is possible that additional fair value
adjustments could be required in the remainder of the first quarter ending
January 31, 2008. However, investors should not expect CIBC to update the
information in this release in advance of the scheduled announcement of its
first quarter results on February 28, 2008.
    CIBC also has exposure to one other counterparty (non financial guarantor)
in respect of U.S. residential real estate. However, CIBC's agreement with
this counterparty requires them to post collateral, and this counterparty is
currently in compliance with this agreement. CIBC previously disclosed an
exposure to a second non financial guarantor counterparty in respect of U.S.
residential real estate. CIBC has reached an agreement with this counterparty
to unwind this transaction at no cost.
    In addition, CIBC has exposure to 11 financial guarantors where the
underlying assets are unrelated to U.S. residential real estate. The fair
value of this exposure is approximately $750 million as at December 31, 2007.
    "The capital raised through this offering will provide CIBC's shareholders
additional certainty and will assist in enabling our management team to direct
their full energy and resources on continuing to execute our strategy," said
McCaughey. "In addition, with the changes we made to our management team last
week, combined with the steps we have taken to refocus our World Markets
business, we are confident our core franchise is well-positioned for solid
performance and growth."

    Table 1

    Tier 1 Ratio Sensitivity to Additional Write-downs on U.S. Residential
    Real Estate Exposures

                                               Tier 1 Ratio Estimate with
                         Dec. 31/07             Hypothetical Additional(2)
                       Tier 1 Ratio                  Write-downs of:
                           Estimate(1)   ------------------------------------
                      (factoring in       $2.0 billion       $4.0 billion
                       $2.4 billion            pre-tax            pre-tax
    Capital Raised          pre-tax      ($1.3 billion      ($2.7 billion
    ($ billion)          write-down)         after-tax)         after-tax)(3)
    ----------------- ----------------   --------------     -----------------
              2.75             11.3%              10.2%               9.0%
              2.94(4)          11.4%              10.3%               9.2%

    (1) Estimated on a Basel II basis
    (2) i.e., in addition to the write-downs taken as of December 31/07
    described in press release. These numbers are illustrative only. CIBC has
    no information that would lead it to conclude that any additional
    material write-downs will be taken.
    (3) OSFI has announced that as of January 2008 the amount of preferred
    shares permitted for inclusion in Tier 1 capital has increased from 25%
    to 30%. The pro-forma impact of this change is to increase the Tier 1
    ratio to 9.1% in the $2.75 billion capital raised case and 9.3% in the
    $2.94 billion capital raised case.
    (4) $2.94 billion includes the underwriters over-allotment option.

    Table 2
    Unhedged CDO/RMBS with Exposure to U.S. Residential Real Estate

                                                      Dec 31,
                                       Writedowns       2007        Current
                            Notional      to Date       Mark      Rating of
    Tranche     Type          (US$MM)      (US$MM)    (US$MM)      Exposure
    ---------   ----------- ---------  -----------  ---------- --------------
                                  (A)          (B)  (A) - (B)  (Moody's/S&P)

    Super       - CDO of
     Senior       Mezz.
                  RMBS           300          185        115      n/a / AAA
                - CDO
                  Squared        628          628          -     B(2) / BB(2)
                                                                  and B(2) /

    Warehouse   RMBS             388          257        131     54% AA;
                                                                  30% A; 16%
                                                                  BBB to B

    Mezz.       CDO Squared      116          116          -    Ca/CCC to

    Various     Various          178          117         61    Majority
                                                                (greater than
                                                                 or equal to)
                            ---------  -----------  -----------

                               1,610        1,303        307(1)

    (1) Partially mitigated by subprime index hedges with estimated remaining
    hedge value of $155mm.
    (2) Indicates on credit watch with negative implications

    Table 3

    Please click to visit the Hedged CDO/RMBS with Exposure to U.S.
Residential Real Estate,


    Legal Disclaimer
    These securities have not been, and will not be registered under the
United States Securities Act of 1933, as amended, or any state securities
laws, and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements.

    Forward Looking Statement

    From time to time, we make written or oral forward-looking statements
within the meaning of certain securities laws, including in this press
release, in other filings with Canadian securities regulators or the U.S.
Securities and Exchange Commission and in other communications. These
statements include, but are not limited to, statements we make about our
operations, capital, business lines, financial condition, risk management,
priorities, targets, ongoing objectives, strategies and outlook for 2008 and
subsequent periods. Forward-looking statements are typically identified by the
words "believe", "expect", "anticipate", "intend", "estimate" and other
similar expressions or future or conditional verbs such as "will", "should",
"would" and "could". By their nature, these statements require us to make
assumptions and are subject to inherent risks and uncertainties that may be
general or specific. A variety of factors, many of which are beyond our
control, affect our operations, performance and results, and could cause
actual results to differ materially from the expectations expressed in any of
our forward-looking statements. These factors include: the creditworthiness
and continued viability of our counterparties; the continued volatility in the
U.S. residential mortgage market; credit, market, liquidity, strategic,
operational, reputation and legal, regulatory and environmental risk;
legislative or regulatory developments in the jurisdictions where we operate;
amendments to, and interpretations of, risk-based capital guidelines and
reporting instructions; the resolution of legal proceedings and related
matters; the effect of changes to accounting standards, rules and
interpretations; changes in our estimates of reserves and allowances; changes
in tax laws; that our estimate of sustainable effective tax rate will not be
achieved; political conditions and developments; the possible effect on our
business of international conflicts and the war on terror; natural disasters,
public health emergencies, disruptions to public infrastructure and other
catastrophic events; reliance on third parties to provide components of our
business infrastructure; the accuracy and completeness of information provided
to us by clients and counterparties; the failure of third parties to comply
with their obligations to us and our affiliates; intensifying competition from
established competitors and new entrants in the financial services industry;
technological change; global capital market activity; interest rate and
currency value fluctuations; general economic conditions worldwide, as well as
in Canada, the U.S. and other countries where we have operations; changes in
market rates and prices which may adversely affect the value of financial
products; our success in developing and introducing new products and services,
expanding existing distribution channels, developing new distribution channels
and realizing increased revenue from these channels; changes in client
spending and saving habits; and our ability to anticipate and manage the risks
associated with these factors. This list is not exhaustive of the factors that
may affect any of our forward-looking statements. These and other factors
should be considered carefully and readers should not place undue reliance on
our forward-looking statements. We do not undertake to update any
forward-looking statement that is contained in this press release or in other
communications except as required by law.

    Investor Presentation

    CIBC will hold a conference call to discuss this announcement on January
14, 2008 at 4:30 p.m. (EST). An audiocast will also be available in English
and French at, About CIBC. Participants can also listen to the
conference call in English (416-340-2217 or 1-866-696-5910, passcode 3248566
followed by the number sign) and French (514-861-2255 or 1-866-696-5910,
passcode 3248569 followed by the number sign). A slide presentation will be
available at, About CIBC, prior to the call. As the call will
take place during the window of a public share offering, there will be no
question and answer period. A telephone replay in English (416-695-5800 or
1-800-408-3053 passcode 3248566 followed by the number sign) and French
(514-861-2272 or 1-800-408-3053, passcode 3248569 followed by the number
sign), as well as an archive of the audiocast at, About CIBC,
will be available until midnight (EST) on January 28, 2008.

    %SEDAR: 00002543EF

For further information:

For further information: Rob McLeod, CIBC, (416) 980-3714 for media
inquiries; John Ferren, CIBC, (416) 980-2088 for analyst/investor inquiries

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